How Much Money Do You Need To Invest In Stocks?

Stocks are a great way to invest money and make money, but how much money do you need to invest in stocks and how do you do it?

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How much money do I need to invest in stocks?

You don’t actually need that much money to start investing in stocks. There are a number of apps that will let you open accounts for a very small amount of cash. 

However, investing small amounts of money means you’ll only earn small profits. If your end goal is to bring in major cash flow, you’ll need to invest a lot more money.

Can I start trading stocks with $100?

Yes, you can trade stocks with $100. Now, there once was a time when opening a stock trading account meant investing thousands of dollars with a brokerage house . Now, however, you can start with much less money and use investing apps like Acorns or Betterment.

These apps let you open an account for $100 or less, and better yet, they’ll do all the work and manage your money for a low fee. You won’t make cover-of-Forbes kind of money this way, but apps are safe and easy avenues to learn Investing 101 without taking a big risk.

How much of my income should I invest in stocks?

Experts typically advise you to invest 10-12% of your annual income in stocks. So if you make $50K a year, you’ll want to set aside around $400 a month to invest with. That’s about $4,800 a year. 

Of course, when it comes to investing, you also should consider your comfort level– how much risk do you want to take on? What’s your ultimate goal from investing? If you’re just starting out, 10% might feel like way too much. If so, start at a lower percentage until you feel more confident in how things work. 

How do you profit from stocks? 

You profit from stocks by investing in companies that can grow in value. 

When you invest in a stock, you’re hedging your bets, putting money into the belief that this particular stock will go up in price. So if one share of Company X is valued at $100 today, then by buying it, you believe this stock will be worth more than $100 a share in the future. 

The value of that share often depends on the success of the company. If Company X releases a hot new product, their stock price will jump. But if Company X is involved in a scandal or loses money, the stock value will drop. Sounds a lot like high school, huh? That’s because it kind of is. When it comes to stocks, street cred goes a long way. People who buy stocks are just trying to figure out which companies will be successful in the future. 

Can you become a millionaire from stocks?

Yes, it is possible to become a millionaire by investing in stocks, but only if you are investing large sums of money to begin with. 

The best investors can expect to earn back between 5-10% on the money they invest. So to earn one million dollars in investments in a year, you’d need to put up at least ten million dollars at the start.

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Not many people have a spare ten million lying around. Or any million lying around. But if you invest five grand into stocks a year, then at the end of a good one, you could earn a profit of around $500. 

How do I get started investing in stocks? 

To get started investing in stocks, you need to open up an investment account.

How you go about this all depends on how comfortable you are with the market. If you’re a loyal Wall Street Journal reader and never miss Squawk Box, go ahead and start a trading account. You’re probably up enough on the market to start buying stocks on your own.

But if this is all so new to you, the easiest route is to download an investing app. For a small fee, these apps have the pros managing your money so you don’t have to worry about picking the stocks you invest in. 

Investing isn’t as complicated as it sounds and it doesn’t take as much money to get started as you probably think. Begin with small sums and basic investing apps to get comfortable with the market. As your expertise and confidence grows, you can invest more money and take more control of your stock purchases.

Sam Garrison

Sam Garrison

Sam Garrison is the President and co-founder of Stackin, a financial wellness company. Before Stackin, Sam built and launched new ventures at BCG Digital Ventures, the venture and incubation arm of The Boston Consulting Group, where he also supported the executive team as strategic program lead. As a lifelong millennial, Sam has tried to solve most of his problems through technology instead of waiting in line at a drab office.